State Consumer Disputes Redressal Commission
Sajeena Abdul Latheef vs 1. Chairman, Reliance Capital Ltd on 26 April, 2014
Daily Order
Kerala State Consumer Disputes Redressal Commission Vazhuthacaud,Thiruvananthapuram Complaint Case No. CC/12/31 1. SAJEENA ABDUL LATHEEF BIYA MANZIL,PRATHEEKSHA NAGAR,KILIKOLLOOR.P.O KOLLAM KERALA ...........Complainant(s) Versus 1. CHAIRMAN,RELIANCE CAPITAL RGISTERD OFFICE RELIANCE CAPITOL LTD,H BLOCK,IST FLOOR,DHIRUBHAI AMBANI GROUP NAWI MUMBAI MAHARASHTRA ............Opp.Party(s) BEFORE: SMT.A.RADHA PRESIDING MEMBER PRESENT: ORDER KERALA STATE CONSUMER DISPUTES REDRESSAL
COMMISSION VAZHUTHACAUD, THIRUVANANTHAPURAM
C.C.NO.31/2012
JUDGMENT DATED 26/04/2014
PRESENT:
SMT. A. RADHA : MEMBER
SHRI. K. CHANDRADAS NADAR : JUDICIAL MEMBER
SMT. SANTHAMMA THOMAS : MEMBER
COMPLAINANT:
Sajeena Abdul Latheef, W/o. Abdul Latheef,
Biya Manzil, Pratheeksha Nagar-34,
Kilikolloor P.O., Kollam.
(By Adv: M. Ziad)
Vs
OPPOSITE PARTIES:
1. Chairman, Reliance Capital Ltd.,
Registered Office, 'H' Block,
1st Floor, Dhirubhani Ambani, Knowledge City,
Navi Mumbai-400710.
2. The General Manager,
Reliance Capital Ltd.,
MBC Centre, Ground Floor,
143-A, Ghodbunder Road,
Opp. Cine Wonder Cinema,
Kapurbavdi, Thane West,
Maharashtra-400 607.
3. The Branch Manager,
Reliance Securities Ltd.,
4th Floor, Parijath House,
Manjrekar Lane, 1076,
Off. Dr. E-Moses Road,
Worti Naka, Mumbai-400 018.
4. The Branch Manager,
Reliance Securities Ltd.,
Rohini Building, Panavila Junction,
Thiruvananthapuram-695 001.
5. Branch Manager, Reliance Mutual Fund,
(Reliance Securities Ltd.) 1st Floor,
Dharussalam Complex, Andamukkam,
Kollam-1.
(By Adv: Prathap G Padickal)
C.C.NO.31/2012
JUDGMENT DATED 26/04/2014
SMT. A. RADHA : MEMBER
This complaint is filed to realize Rs.23,00,000/- with 12% interest which was entrusted to the opposite parties to invest in share trading business. The complainant alleges deficiency in service against the opposite parties for the huge loss sustained to him. Further relief claimed is for compensation of Rs.2,00,000/- and Rs.10,000/- towards cost . The 1st opposite party is the Chairman of Reliance Company Ltd., the 2nd opposite who party is the General Manager of Reliance Capital Ltd., the 3rd opposite party is the Branch Manager of Reliance Securities Ltd., the 4th opposite party is Branch Manager of the Reliance Securities Ltd. at Thiruvananthapuram and the 5th opposite party is the Branch Manager of Reliance Securities and Mutual Fund at Kollam.
2. The complainant was approached by the representatives of 4th and 5th opposite parties who appraised her about the schemes of opposite parties who are conducting share trading business and induced the complainant that opposite parties will do all the business and on investment of money, the further business will be done by opposite parties on behalf of her and assured the investment will double within one year. The complainant transferred two cheques dated 28/05/2010 for Rs.14,00,000/- and Rs.9,00,000/- (altogether Rs.23 Lakhs) with the Federal Bank Polayathodu Branch, Kollam and the said amount was credited on 01/06/2010 in opposite party's account. It is stated in the complaint that all the details regarding transactions were entered in the e-mail address of the husband of the complainant. It is informed on 03/06/2010 through e-mail that opposite parties purchased 200 numbers of shares of Sterlite Industries @ Rs.654/- per share. Though 4th opposite party informed that the business is on high profit no details regarding profit accrued were entered in the demat account of the complainant. On 07/01/2011 the 4th opposite party informed through e-mail that the business is in loss due to unexpected scam happened in the company. Subsequently, the complainant received an e-mail from 3rd opposite party on 04/02/2011 directing the complainant to clear outstanding dues to the opposite parties. It is the allegation of the complainant that the amount entrusted to the opposite parties were misappropriated and no details of the business done or entered into by opposite parties in any profitable business. Opposite parties are jointly liable to compensate the loss sustained to the complainant. The intention was to grab huge amount from complainant and complainant had financial loss and mental agony against which the complaint is filed to realize the loss from the opposite parties.
3. Opposite parties 1 and 2 filed version denying all allegations. There is no privity of contract between the complainant and opposite party and stated that 1st and 2nd opposite parties are independent legal entity based at Mumbai. Trading related activities are carried out through SEBI registered Stock Broking entity and the Chairman and General Manager are not involved in the day to day activities of the opposite party company. As the alleged transactions are carried out through 3rd and 4th opposite parties, the complaint is to be dismissed on the ground of misjoinder of parties.
4. It is contended in the version filed by 3rd and 4th opposite parties that the complaint is not maintainable as the Branch Managers are only employees of the company. The company is dealing in Securities Broking activities offering trading in equity through on-line trading facilities. The Complainant's Account was opened after executing the Stock Broker and Client Agreement, Risk Discloser documents and other agreement in May 2010. The complainant was made available with Electronic Contract Notes, (ECN), Ledger statements and other information in time. The agreement executed as per terms and conditions between the complainant and Reliance Securities Limited. Further the disputes are to be referred to Arbitration as detailed in Contract Note and Mumbai is having exclusive jurisdiction. The consumer dispute does not arise in this case and Consumer Fora lacks jurisdiction to entertain the complaint. The amount transferred for the purpose of share trading business is purely commercial and such transactions are not covered under the Consumer Protection Act. So the services availed for commercial purposes are excluded from the purview of the Consumer Dispute Redressal Agencies. The trading undertaken is for profit and is speculative in nature are excluded Under Section 2(1)(d) of Consumer Protection Act. It is admitted that Rs.14,00,000/- and Rs.9 Lakhs had transferred in the complainant's trading account with Reliance Securities Limited on 01/06/2010. The complainant's trading account was opened with the opposite party after executing agreements including Know Your Client forum (KYC), Member Client Agreement (MCA) and Risk Disclosure Document (RDD) in May 2010 and thereafter welcome kit consisting of welcome letter, client-master report, log-in-id, password and Security Token Key. Complainant could log into her on line trading portable and place orders on-line and view the transactions. The trading was carrying out from 03/06/2010 to 31/05/2011. The trades were also informed in the complainant's mobile number. It is also contended that opposite parties transferred Rs.4,02,000/- on 02/06/2011 to the complainant's bank account. The complainant was well aware of the transactions carried out and balances available in her trading account and any losses if any, trading related losses which the opposite parties are not liable to compensate. No assurance was given by the opposite parties assuring profit or any responsibility towards any losses and risk involved in dealing in equity shares traded on the platform of stock exchange. Hence no deficiency in service for the loss in trade can be attributed upon the opposite parties and the complaint is only to be dismissed.
5. In the version filed by 5th opposite party it is stated that the affairs of 5th opposite party are managed by Reliance Capital Asset Management Limited, a company having its registered office at Mumbai and authorized to act as Manager but does not carry out the share trading related activities as alleged by the complainant. The trading related activities are carried out through SEBI registered Stock Broking entity by 3rd and 4th opposite parties. The Branch Manager of Reliance Mutual Fund are not carrying out any alleged transactions. The complaint is to be dismissed on the ground of mis-joinder of parties.
The issues for our consideration are:-
(1) Whether the complaint is maintainable? (2) If so, whether it amounts to deficiency in service? (3) Reliefs and costs? 6. To substantiate the case, the power of attorney holder
of the complainant filed affidavit and was examined as PW1 and marked documents as Exbts. A1 to A9. On the part of opposite parties affidavit filed and DW1 was examined and Exbts. were marked as B1 to B10.
Issue No.1:
7. The first contention raised by the 1st and 2nd opposite party is that the company is not involving in the day to day activities and the share trading is carried out by 3rd and 4th opposite parties. The complaint is mainly objected on the ground that the nature of share trading is profit making which is commercial and it does not come under the purview of the Consumer Protection Act. Since there is no contention that the business is carrying out for self-employment purpose for earning his livelihood, the maintainability of the complaint is to be considered.
8. The allegation of the complainant is that a loss of Rs.23 Lakhs sustained to his wife was due to the broker's negligence on the part of opposite parties. All the opposite parties are jointly and vicariously liable to compensate the loss. The loss occurred within a very short span of one year and it was due to the inefficient and casual attitude in conducting business. The complainant issued a cheque for Rs.14 Lakhs and Rs.9 Lakhs on 28/05/2010 and the original bank statement is produced and marked as Exbt.A2. The client master report issued by the opposite party is marked as Exbt.A3 and the amount was credited to the account of opposite parties on 01/06/2010. The original e-mail print out showing the purchase of 200 shares of Sterilized Industries @ Rs.654/- per share on 03/06/2010 is produced and marked as Exbt.A4. The information given through e-mail by the 4th opposite party on 22/10/2010 stating that the business is moving on high profit is evidenced by Exbt.A5. The details regarding profits accrued were not seen entered in the demat account or any details of the transaction. The communication through e-mail dated 07/10/2011 that the business of the complainant is running in loss due to the holding of LIC Housing Finance as that share unexpectedly declined due to scam happened in the share market. The e-mail print out to prove the detail is shown as Exbt. A6. Thereafter the complainant received a communication through e-mail from 3rd opposite party on 04/02/2011 directing the complainant to clear the outstanding dues evidenced by Exbt.A7. The 4th and 5th opposite parties assured that the company will conduct business for and on behalf of the complainant and also assured that the Reliance Capital will be responsible against any loss occurred to the customers. The opposite parties are liable for not entering into any profitable business and also for not providing details of the business done by the opposite parties on behalf of the complainant which amounts to deficiency in service and the complainant is to be compensated for the loss by the opposite parties.
9. It is admitted that the opposite parties are conducting share trading business and the complainant invested Rs.23 Lakhs and the amount was credited to the opposite party's account in June 2010. The 3rd and 4th opposite parties, Reliance Security Limited, are dealing with securities broking activities, furnishing trading in equity through online trading facilities. While client opens the account with the opposite parties initially an agreement is executed between the stock broker and client agreement (Exbts. B1), risk disclosure documents and other equipments. The complainant is provided with enough information and was well aware of the trades carried out in her trading account. It is not disputed that the complainant had not executed Member Client Agreement between the Reliance Securities Limited and the complainant. The agreement is followed by its own terms and conditions bound by stock exchange, NSE and BSE (Exbt.B1). It is also clear from the complaint itself that complainant had transferred funds to her trading account maintained by opposite parties. All the communications produced by the complainant itself proves that the share trading involved by the opposite parties were informed well in time. So the complainant could not plead that she was not aware of the day to day trading undertaken by the opposite parties. It is also relevant that there is arbitration clause envisaged under the stock exchange transactions evidenced by Exbt.B5 ad B6. Hence the Consumer Forum lacks jurisdiction to entertain the complaint. The opposite parties produced the details of communications sent, e-mail sent to the complainant's husband's address. Further the share trading business is purely commercial ie. buying and selling stocks for profits. Therefore, the transactions carried out by the complainant through the opposite party are commercial transactions. Such transactions are not covered under the Consumer Protection Act. The trading undertaken by the complainant is speculative in nature and the complainant is not a consumer under 2(1)(d) of Consumer Protection Act. The complainant had never informed or complained about the alleged unauthorized trading in her account and the notice issued by the Advocate was replied and the copy of reply is marked in evidence as Exbt.B9. The complainant made enquiry regarding the pledge of shares which was immediately clarified through copy of QRC and thereafter the complainant requested for changing in brokerage structure in January 2011. Hence the allegation of the complainant that the opposite party had not furnished any details regarding the transaction is false. It is true that the stock exchange involves risk in trading in capital market and the opposite party is not liable for any trading and related loss incurred to the complainant.
10. The Counsel for the opposite parties submitted that the complaint is not entertainable as Consumer Forum lacks jurisdiction to entertain the case. The complainant is not a consumer as envisaged under the Consumer Protection Act. He also relied on the decision of the Hon'ble National Commission in the case of Vijaya Kumar Vs. the Branch Manager, Indus-Ind Bank 2012 CPJ 1801(NC) wherein the "regular trading in the purchase and sale of the shares is a commercial transaction and the only motive is to earn profit. Thus this activity is purely commercial one and is not covered under the Act". This point was again re-iterated by the Hon'ble National Commission in Kotak Securities Ltd. Vs. Bharath Kumar Ranchhoddas Rana & 3 Others. The purpose being commercial transaction and the purchase is to earn profit, the end result being commercial transaction, complaint is not maintainable. He also relied on the decision of the Hon'ble National Commission in A. Assaithambi Vs. The Company Secretary & Others that the complainant has nowhere pleaded that he is dealing with share business as self-employment for livelihood. Hence complainant does not come within the purview of 'consumer' under section 2(d)(ii) of the Consumer Protection Act. It is clear from the deposition of the power of attorney holder of the complainant that he is the husband of the complainant, is an Electrical Inspector by profession, who invested money in the name of his wife in trading account which confirms that the investment is for profit making. The complainant was well aware of all the details of the said transactions which were communicated through e-mail of the husband of the complainant and produced by the complainant himself in evidence. Hence complaint is only to be dismissed in-limine.
11. Having considered all the documents and on hearing the parties, we find that the complainant invested Rs.23 Lakhs with the opposite parties who approached her with the schemes of share trading business. It is clear that share trading is a profit making business. The amount was credited in the account of opposite parties in June 2010 and the transactions between the parties were produced as documents in evidence. The husband of the complainant was examined as PW1 who is an Electrical Inspector in Government Service deposed that he invested the money in his wife's name with the opposite parties. The transaction mail Id was of the husband of the complainant. So the act of PW1 was that of a profit oriented commercial activity which is not covered under the Consumer Protection Act. Nowhere in the complaint pleaded that share trading is done for self-employment. Being a commercial purpose, the disputes between the parties are excluded and the complainant is not a consumer under section 2(d)(ii) of the Consumer Protection Act. Share trading business is speculative in nature and the hike and fall in the value of shares are beyond external control and the complaint does not come under the Consumer dispute and the complaint is not maintainable.
With the above discussions, we find that the complaint is not entertainable and no relief can be allowed.
In the result, complaint is dismissed. No order as to costs.
A. RADHA : MEMBER
K. CHANDRADAS NADAR : JUDICIAL MEMBER
SANTHAMMA THOMAS : MEMBER
Sa.
APPENDIX
Witness for the Complainant:
PW1 - 11/01/2013 - R. Abdul Lathif.
Witness for the opposite party:
DW1 - 27/11/2013 - Manoj.M
Exhibits for the Complainant:
A1 - Power of Attorney executed by the Complainant.
A2 - Original Bank Statement.
A3 - Original client master report issued by the opposite parties.
A4 - Original e-mail printout dated 03/06/2010
A5 - Original e-mail printout dated 22/10/2010
A6 - Original e-mail printout dated 07/01/2011
A7 - Original e-mail printout dated 04/02/2011
A8 - Lawyer's Notice dated 21/11/2011
A9 - Reply notice from Reliance Securities Limited dtd. 08/12/2011
Exhibits the opposite parties:
B1 - 11/01/2013 - Stock Broker and Client Agreement (NSE)
B2 - 11/01/2013 - NSE ECN LOG statement - process date
June 03, 2010 to July 29, 2010
B3 - NSECM July 30, 2010 to May 5, 2011.
B4 - 11/01/2013 (Series) - Copy of e-mail- Reply - 9 Nos.
B5 - NSE - Arbitration details.
B6 - Reliance Securities Limited - Contract Note.
B7 - Contract details November 9, 2010 to February 17, 2011.
B8 - NSE - Capital statement of Reliance Securities.
B9 - Reliance Securities Ltd. - Annexure "F" - Letter
B10 - NSE Capital Statement.
A. RADHA : MEMBER
K. CHANDRADAS NADAR : JUDICIAL MEMBER
SANTHAMMA THOMAS : MEMBER
Sa.
KERALA STATE CONSUMER
DISPUTES REDRESSAL
COMMISSION
THIRUVANANTHAPURAM
C.C.NO.31/2012
JUDGMENT DATED 26/04/2014
Sa.
[ SMT.A.RADHA] PRESIDING MEMBER